Name: Jena Seely

NDFS 458
Financial Management Assignment

1. Annual Cost of an Employee (5 points)

As the Clinical Nutrition Manager, you recently made a job offer to a new RDN. You
offered her a full-time position (2,080 hrs/year) at an hourly rate of $23.50. Here are
additional factors for your consideration:

2,080 x $23.50 = $48,880 a year

A. Personal Time Off (PTO) Benefits

Vacations, holidays, and sick time are financed through a paid leave system. For each
hour an employee works, fractions of hours are added to the paid leave bank. When
paid time off or paid leave is taken or sickness occurs, the leave bank is reduced
accordingly. As seniority increases, the fractions of hours added to the paid leave bank
are also increased as shown on the following chart.

Paid Leave Time Accrual Rate

5 years or less 0.107 hours per hour worked
6-14 years 0.118 hours per hour worked
15 or more years 0.142 hours per hour worked

Calculate the value of the paid leave bank for this employee for one year.

2,080 x 0.107 = 222.56 hours per year of paid leave

222.56 hours x $23.50 = $5,230.16 PTO a year

B. Health Care Insurance

Health care insurance is provided for all full-time employees. The cost of the insurance
to the department is $350.00 per month per employee.

$350 x 12 months = $4,200 per year for insurance

C. Retirement Benefit
The Medical Center retirement plan specifies 7.5 percent of total wages be paid to the
retirement plan of each employee.

An additional contribution is made to FICA (Social Security) at a rate of 7.5 percent of

wages. This is a required tax that is paid by the employer. Each employee has 7.5
percent of wages withheld which is also a FICA contribution. The department does not
pay this portion.
 D. Registration Maintenance
As part of negotiation, it was agreed that the department would pay for the RDNs
annual state certification fee ($37) and annual Commission on Dietetic Registration
credentialing fee ($60).

$37 + $60 = $97

Based on this information, what is the total cost to the organization of employing this
RDN for one year?

Cost to employer:
2080 hrs x $23.50 = 48,880 annual income
(0.107 x 2080) hrs x $23.50 = $5,230.16 PTO bank
$350 x 12 = $4,200 insurance
0.075 x $48,880 = $3,666 FICA (organizations portion)
0.075 x $48,880 = $3,666 Retirement
37 + 60 = $97 Registration fees
=$65,739.16

2. Analysis of a Medical Centers Foodservice Income Statement (5 points)

Using the data in Foodservice Organizations on page 421 (Figure 13-4; Riverside
Regional Medical Center), please complete these calculations:

A. Food cost percentage

o Cost of food/ sales
o 274,013/381,474 = 0.72 = 72%
B. Labor cost percentage
o Cost of labor/ sales
o (Salary 165,478+Hourly 373,380) / 381,474 = 1.41 = 141%
C. Profit margin
o Net profit/ sales
o (Income 381,474 Total Expense 822,745) / 381,474= -1.16

- What do these ratios tell you about the foodservice operation?

o 72% of their sales are used for the cost of food and 141% of their sales goes
towards the cost of labor. Based off of their income verses their expenses they
are in a deficit. They are not making any profit.
- As a manager, how would these ratios affect your decision making?
o I would do everything I could to reduce the number of employees and/or the
amount of hours they are working. In the end, reducing the cost spent on the
labor.
3. Analysis of the Balance Sheet (5 points)
Using the data in Foodservice Organizations on page 420 (Figure 13-2) to calculate the
following ratios. From a managers perspective, provide an interpretation of each.

A. Current ratio
o Current Assets/Current Liabilities
o 117,973/61,175 = 1.93
o Based off the number of assets the organization will be able to make
payments for products and services.
B. Acid-test ratio
o Cash + Accounts receivable + Marketable securities/ Current liabilities
o (34,156 + 5,521) + 67,278)/61,175 = 1.748
o The organization has a good chance of being able to pay their bills because of
the amount of assets they have.
C. Solvency ratio
o Total assets/Total Liabilities
o 880,862/ (61,175+ 366,047) = 2.061
o Based off of the total number of assets, the organization will be able to meet
its long term obligations and financial leverage.
D. Inventory turnover (Assume that the beginning inventory was $6,450 and a total of
$23,150 of inventory was purchased throughout the year. Average inventory is
$3,250. Ending inventory is $5,330).
o Cost of goods sold/average inventory = inventory turnover
o ((6,450+23,150) 5,330)/ 3,250 = 7.47
o What does the inventory turnover tell you about this business? How would
you evaluate this turnover number? Explain.
Over the year 7.47 of the total inventory was sold. This is a relatively
good amount as the goal would be to cycle through the inventory but
still maintain an amount on hand in case there were more sales than
predicted.

4. Identify and explain two similarities and two differences in how a Director of a Child
Nutrition Program (AKA school lunch) and a restaurant owner might approach
financial management of their business. (5 points)
a. The director of a child nutrition program receives a fixed amount from the
government. No matter what their sales may be they are to stay within the
allotment given. A restaurants income is based off of their customers. When
variables within the restaurant iimprove the output can result in greater income.
b. Another difference are the policies established for the organization. The school
Nutrition Program need to manage their finances towards meeting the policies of
providing nutritious meals while still providing food that is palatable to the
 children. Restaurants are primarily focused on providing food that the customers
are going to enjoy at a reasonable price.
c. One similarity is that both directors can seek to improve their input as well as the
transformation to some degree in order to better manage their finances. One
example is that they can both try to make the food as presentable as they can in
order in increase their sales.
d. Another similarity is the overall goal of staying within their income. No
organization wants to spend more than they make.

5. Using your best judgment, discuss and show (using some sample calculations) the
potential impact of raising the minimum wage to $12/hour for the non-profit food
industry. As a manager, how would you navigate this change? See:
https://www.whitehouse.gov/raise-the-wage. (5 points)
a. Based off of the calculations I did in the previous foodservice organization and in
the example we did in class, labor cost seems to be a reoccurring expense that
causes a higher labor cost percentage. It would be difficult to meet the demand of
paying employees without some adjustments.
b. If the minimal wage increased to $12 there would be an even greater increase in
labor cost.
Consider a facility that currently pays their employees $10 an hour in
comparison to paying their employees $12 an hour. Over one year the
company spends $438,000 with $10 an hour and $525,600 with $12 an
hour. They have an annual income of 375,000
Labor cost percentage with $10 hourly wage
o 438,000/ 375,000 = 116%
Labor cost percentage with $12 hourly wage
o 525,600/ 375,000 = 140%
c. In order to meet the demand of paying employees we would need to increase the
cost of our product. I would also consider hiring more qualified employees who
would be able to perform more jobs. The hope would be to decrease the number
of employees and amount of hours they work.

6. As the Food and Nutrition director at a large medical center, you recognize a major
proportion of your cafeteria sales come from fountain drinks, fried foods, and desserts.
You feel internal tension between providing a healthy food environment for patients,
guests, and medical center staff (which is consistent with the organizations mission)
and the need to keep your sales high. Who wins? The manager within you, the
dietitian within you, or can both parts of you win? Thoughtfully explain how you
would approach this dilemma. (5 points)
a. I often think of this dilemma even now with regards to my own family and those
I love. I feel as though both the dietitian and manager can win. Though the body
doesnt need fountain drinks, fried foods or desserts there is psychological
satisfaction in eating them. They dont need to be eaten all the time though. One
thought I have is to reward customers when a certain number of healthy food
choices are bought. An example would be that they could get a class of soda after
several ounces of water or flavored water are drank. If a rewards system isnt
effective, especially in making life long habits, we would take the risk of only
offering dessert and fried food a couple times a week and offer healthy,
enjoyable foods on the other days. We would make a specific effort to provide
healthier sweet options like a seasonal fruit to replace the dessert or baked
options that would replace the fried food such as baked french fries. Employees
could make suggestions of specific healthy meals and snacks they enjoy.
Whether they are meals and snacks they have had at other food facilities or in
their own home.
*Elements of this assignment are adapted from assignments developed by Dr. Nyland and Dr. Stokes